Ironically, it’s the Catholic Church that has invented this ruse.

The Archdiocese of Portland was the first to do it. Three months later the Roman Catholic Diocese in Tucson, AZ, followed suit and three months after that the diocese in Spokane, WA, did it, too.
They all filed for bankruptcy and since then more than 15 other Catholic dioceses and religious orders have filed for bankruptcy to seek protection from lawsuits by sexual-assault victims, resulting in about 4,000 claims seeking compensation for past wrongdoing. This year, three more Catholic dioceses announced intentions to file.

Escaping debt—escaping court ordered financial penalties for the Church’s abuse of children and women—through bankruptcy.

But, of course. The outcome of this ruse is

[T]he legal strategy uses the law that protects companies from creditors to help preserve its mission and shield assets from claims made by victims of sexual abuse. Filing for chapter 11 freezes lawsuits and provides breathing room to work out a plan to compensate abuse victims.

Never mind that there already are plans for compensating the children and women: the courts’ judgments and assigned penalties from those cynically frozen suits.  There’s nothing to work out.  Aside from that, I’m not sure that a mission that includes condoning officials’ abuse of the most helpless of their flock is a mission worth preserving.  Condoning? See the Pope’s response to attempts to punish priests who are found abusive. See his attempts to absolve higher officials—bishops and cardinals—of their responsibility for the abuses.

And the strategy is spreading.  USA Gymnastics and the Boy Scouts of America are both in or looking to bankruptcy as a way to escape judgment.  Condoning?  See USAG’s—and USOC’s, come to that—covering up of a doctor/trainer’s decades long abuse.

This stinks.

I’m not much enamored of Federal laws, but we need one here: bankruptcy must be legally barred as a means of avoiding financial responsibility for this sort of abuse.  We even have a precedent: college students can’t duck their student debt through bankruptcy, albeit that bar is newly in flux.

Churches (not just Catholic), and any other organizations whose leadership teams or individuals are found culpable of child abuse or sexual abuse of women, cannot be allowed to run away from their fiscal responsibility (criminal courts work the crimes here, already; although I’d certainly like to see the employing institution punished, also).  No debt “reorganization” through bankruptcy should be allowed.  Pay the judgment in full or cease to exist.  With one exception: the guilty ones must be permanently barred from taking any role other than parishioner or line employee in any religious institution, regardless of religion, or in any company in the originating industry.  If the bankruptcy court is empowered to require that, then any fiscal penalties could legitimately undergo some adjustment once publicly available proof has been provided that all the named individuals—and all of the individuals responsible must be named—have been so barred.

Sadly, this bar will have to be done civilly, since the Church, of which the Catholic Church and USAG have shown themselves the canonical examples for all institutions—have chosen not to.